Falkland Islands in line for massive oil windfall thanks to multi-billion-pound new drilling venture

The Falkland Islands are set to receive a massive oil windfall thanks to a new drilling venture.

Drilling at the Sea Lion oilfield will be massively accelerated after a $3billion investment from Israel's Navitas Petroleum.

The publicly-traded oil firm has acquired a second production vessel which could pump 125,000 barrels of oil per day.

The first output from the vessel is expected by 2030, adding to the planned production of 55,000 barrels per day from its first production vessel, set to draw oil in March 2028.

Navitas owns 65 per cent of Sea Lion, while British firm Rockhopper Exploration owns the rest.

Rockhopper Exploration, listed on London's Alternative Investment Market, suspended trading on Monday as it worked on a planned equity raise to fund its share of the $125million vessel acquisition.

Sea Lion lies 136 miles north of the Falklands in the South Atlantic Ocean.

The oil field is believed to contain the equivalent of about 900 million barrels of oil and sits around 1.6 miles below the seabed, itself at a depth of nearly 1,500 feet.

The Government of the Falkland Islands will take a nine per cent royalty on revenues from the field and a 26 per cent corporation tax on profits, promising a significant new source of wealth for the islands.

The firms will use the Aoka Mizu floating oil platform to drill, with the first phase estimated to cost $2.1billion.

Acquisition of a second floating vessel and development, called OSX1, and drilling in the central area of the oil field, will bring costs up to $3billion.

A spokesman for Navitas told The Times the central area could yield 403 million barrels of oil.

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But the new British-Israeli venture is likely to enrage Argentina, which is battling a struggling economy and still lays claim to the Falklands.

Argentina's invasion and resounding defeat after just 74 days of war in 1982 has not stopped the country from claiming the islands are theirs.

The Falklands - which reaffirmed its British sovereignty through a 2013 referendum in which just three people voted no - have long been eyed up by Buenos Aires because of the islands' natural resources and proximity to Antarctica, where Argentina claims Britain's slice of the South Pole for itself too.

President Javier Milei said in April he was "doing everything humanly possible" to bring the Falklands into Argentinian control.

That came just four months after Navitas and Rockhopper took their final investment decision to proceed with developing the first phase of the oil field, aiming to extract 170 million barrels of oil.

Tensions over the Falkland reignited during the World Cup this summer, which saw the eventual runners-up spark fury by parading a banner reading "Las Malvinas son Argentinas".

Tempers were also stoked by Mr Milei's deputy Victoria Villarruel, who celebrated the victory as not "another match" and described Britons as "usurping pirates".

Samuel Moody, Rockhopper's chief executive, said Navitas displayed a "continued commitment to developing and accelerating Sea Lion" with a significant boost in the project's value.

"We are working alongside Navitas to ascertain the optimal structure for Sea Lion’s participation in OSX-1 and are planning a capital raising to secure the required financing.

"We have already received positive indications of support for this financing and we look forward to updating the market in due course as appropriate," he added.